How Social Security Numbers Work

Problems With Your SSN

Because SSNs are unique, lifelong identification numbers, they serve many beneficial functions. However, those same qualities can also make SSNs problematic.

Why does it matter if someone knows my SSN?

You are not necessarily required to give your SSN to government agencies asking for it. These agencies must provide you with a Privacy Act of 1974 Disclosure Notice, which explains which law allows them to ask, whether you are required to answer and what penalties you face if you refuse to provide the number.

If a business or private company insists on knowing your SSN (they are not bound by the restrictions mentioned above), you can choose either to provide it or to take your business elsewhere.

Sharing your SSN is a potential problem because of the many secondary ways we now use SSNs. During the first few decades that Social Security cards were issued, they contained the phrase "Not to be used for identification." No reinforcing law was passed, however, and since SSNs never change, many institutions -- including hospitals and some banks and brokerage firms -- have found SSNs to be the perfect form of identification.

Some organizations, primarily banks, then began to use SSNs as secret codes or passwords, assuming only the owner would know them. Unfortunately, this is often not the case. The SSA says that if someone knows your name and your SSN and is a good enough actor to convince a clerk or teller that he has forgotten the account number, he might be allowed to transfer funds or conduct other fraudulent business with your money.

Such inconsistencies in the use of SSNs are at the root of the problem, experts say. Our SSNs might appear on our driver's licenses, on mailing labels and on university reports made available to the public in order to maintain federal funding. As such, they can't safely be used as secret passwords or codes; they're too accessible to too many people.

According to the Privacy Rights Clearinghouse, identity theft now occurs at a rate of about 400,000 cases a year -- and that number is growing 40 percent annually. Although Internet identity theft is raising a lot of new fears, experts say that low-tech identity theft, often stemming from criminals finding bits of information in stolen mail or garbage, is still the greater threat. (Before you toss that next credit card offer in the trash, shred it so that no one else can apply for credit in your name!)

We'll look at ways to protect your social security number from theft in the next section.

How 40,000 people used Mrs. Whitcher's SSN for 40 years

If someone has misused your SSN, take heart -- it could be worse. According to SSA historians, over the course of 40 years more than 40,000 people used secretary Hilda Schrader Whitcher's SSN as their own.

In 1937, Whitcher's boss, Douglas Patterson, vice president and treasurer of the wallet-manufacturing company E. H. Ferree, decided to include a demonstration Social Security card in the new line of wallets. To make the false card a better representation of a real Social Security card, he included a real SSN -- his secretary's. The display cards were smaller than actual cards and had the word "specimen" written on them, but many people took the number to be their own SSN anyway. The SSA gave Whitcher a new number and announced that the wallet sample number was not to be used as anybody's SSN. But some people were still using the number as late as 1977!